Sony is said planning to cut 6% of jobs

DaisukeWakabayashi

-- Sony to cut global workforce by 10,000 jobs, people familiar with the matter say

-- Reductions could take place over the next two fiscal years, they say

-- Sony's new CEO Hirai to announce restructuring plan Thursday

(Adds background.)

TOKYO (MarketWatch) -- Sony Corp. (6758.TO) plans to reduce its workforce by an estimated 10,000 jobs, or about 6% of its global workforce, as part of new Chief Executive Kazuo Hirai's restructuring plan, people familiar with the matter said Monday.

The payroll cuts could run through the two fiscal years until March 2014, although the final timing has not been settled, the people said. The potential reductions are the first details to emerge of Hirai's restructuring plan--due to be announced at a corporate strategy meeting Thursday--since he replaced Howard Stringer as CEO of Sony in April.

After four straight years of losses, Hirai's main focus is to turn around the company's struggling electronics business, which once established Sony as a global brand known for innovative products. But in recent years Sony has failed to match the success of Apple Inc.
AAPL, -1.59%
and Samsung Electronics Co.
SSNHY
and its electronics division has suffered from the impact of the strong yen and brutal price competition.

For the last two months, Hirai has huddled with key deputies searching for ways to streamline the company without killing future pipelines for innovations, the people said.

Around half of the headcount reduction is expected to come from two restructuring moves already announced by the company. Last month, Sony said it reached a deal to sell its chemical products business to the Development Bank of Japan.

It also spun off its small- to medium-sized liquid crystal display operations to Japan Display Inc., a newly formed venture, backed by the government, Sony, Toshiba Corp. (6502.TO) and Hitachi Ltd. (6501.TO). Sony has said those two deals could move as many as 5,000 jobs outside of the company.

The remaining cuts are expected to come partly from the television division, where Sony is expected to lose money for an eighth-straight year, the people said.

Last year, Hirai, who at the time was a deputy president in charge of the TV business, scrapped a mid-term goal to sell 40 million televisions a year. Instead, he decided to target 20 million televisions a year, with the company planning to adjust the size of TV sales operations accordingly, the people said.

The restructuring plan will be the company's second major overhaul in four years. The last large-scale cuts came in late 2008 during the global financial crisis when Stringer axed 16,000 jobs and closed a number of factories. As of March 2011, Sony had 168,200 employees worldwide.

Sony's latest headcount reduction is likely to come from moving businesses not considered core to the company outside of the Sony group through sales or spin-offs, the people said.

Stringer, Hirai and five other executive officers are also expected to forgo their bonuses for the last fiscal year that ended in March, the people said.

Sony's plan to reduce its workforce was first reported by Japan's Nikkei newspaper on Monday.

While Hirai will lay out his vision more clearly on Thursday including projections for profitability, he has already started to shape his plan.

In a sign of the importance of the television operations, Sony announced last month a new organizational chart that eliminated a layer of management between the head of the TV business and the CEO so Hirai could directly oversee the division.

Last week, Hirai spoke briefly ahead of a preview of Sony's presentation for its professional products division and pledged to spread cutting-edge technologies from its professional products to more mass-market products. One example presented by Hirai was Sony's 4K technology, a display and imaging breakthrough for presenting moving images four times sharper than existing high-definition video.

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